Arkansas Attorney General Tim Griffin announced Wednesday he filed lawsuits against online gaming company Virtual Gaming Worlds (VGW) and prediction market platform Kalshi, alleging the companies are providing illegal gambling services to state residents.
- Attorney General Griffin has sued VGW and Kalshi over alleged unlicensed gambling activities in the state.
- VGW faces allegations that its dual-currency sweepstakes model allows users to participate in real-money gambling.
- Kalshi is accused of offering sports event contracts without the gambling licenses required under Arkansas law.
The lawsuit against VGW was filed in White County Circuit Court, while the suit against Kalshi was filed in Independence County Circuit Court.
Griffin has accused both companies of misleading customers about the nature and legality of their services, in violation of the Arkansas Deceptive Trade Practices Act.
The case against VGW concerns its sweepstakes casinos and gaming platforms, such as Chumba Casino, Global Poker, LuckyLand Casino, and Luckyland Slots.
Griffin alleges the company’s virtual currency model allows users to gamble with real money while presenting its services as free-to-play entertainment.
VGW maintains it does not operate a gambling business, but Griffin has disputed this.
“Our review of the company shows that claim to be false,” he said.
Users can purchase Gold Coins, which hold no monetary value, and receive bonus Sweeps Coins. The latter can be used to play casino-style games, with any winnings redeemable for cash and prizes.
Griffin argues this arrangement constitutes gambling under Arkansas law despite VGW’s use of separate currencies.
The lawsuit against Kalshi challenges the platform’s event-based prediction markets. Griffin argues the operator allows users to stake money on the outcome of sports and other events without holding the relevant licenses required to offer gambling services in the state.
The Attorney General also disputes Kalshi’s classification as a prediction market, highlighting the platform’s deposit limits and self-exclusion tools as commonly associated with gambling platforms.
He argues Kalshi’s services fall within the scope of gambling activities regulated under state law, saying, “Although Kalshi insists its products are not gambling, its actions speak louder than its labels.”
Both lawsuits seek injunctions barring the companies from continuing their alleged illegal activities, as well as financial penalties, restitution, customer refunds, and applicable taxes.
Second Circuit rejects Kalshi's injunction request
In other prediction market news, Kalshi is facing additional legal challenges over its sports event contracts, following a decision by the U.S. Second Circuit Court of Appeals to reject injunction requests from the company and Coinbase, a cryptocurrency exchange that also offers prediction markets.
The ruling leaves New York and Connecticut free to pursue enforcement of their gambling laws against the platforms while the companies' appeals continue.
During oral arguments, judges also questioned whether sports event contracts qualify as swaps under the Commodity Exchange Act, a distinction central to the dispute over whether state or federal authorities have regulatory oversight. The court did not resolve that question in its order denying the injunctions.
